Prepared remarks
Good day. And welcome to the Prosperity Bancshares Second Quarter Conference Call. All participants will be in listen-only mode. To ask a question, you may press star then one on a touchtone phone. Please note this event is being recorded. I would now like to turn the conference over to Charlotte Rasche. Please go ahead.
Thank you. Good morning, ladies and gentlemen. And welcome to Prosperity Bancshares' Second Quarter 2026 Earnings Conference Call. This call is being broadcast live on our website and will be available for replay for the next few weeks. I am Charlotte Rasche, executive vice president and general counsel of Prosperity Bancshares. And here with me today is David E. Zalman, senior chairman and chief executive officer; H.E. Tim Timanus, Jr., chairman; Asylbek Osmonov, chief financial officer; Eddie Safady, senior vice chairman; Kevin Hanigan, president and chief operating officer; Robert R. Franklin, Jr., vice chairman and former CEO of Stellar Bancorp; Randy Hester, chief lending officer; Mays Davenport, director of corporate strategy; Bob Dowdell, executive vice president; and Ramon Vitulli, Houston area chairman and former president of Stellar Bancorp. David E. Zalman will lead off with a review of the highlights for the recent quarter. He will be followed by Asylbek Osmonov, who will review some of our recent financial statistics, and Tim Timanus, who will discuss our lending activities including asset quality. Finally, we will open the call for questions. Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for purposes of the federal securities laws and, as such, may involve known and unknown risks, uncertainties, and other factors which may cause the actual results or performance of Prosperity Bancshares to be materially different from future results or performance expressed or implied by such forward-looking statements. Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bancshares' filings with the Securities and Exchange Commission, including Forms 10-Q and 10-K and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Now let me turn the call over to David E. Zalman.
Thank you, Charlotte. I would like to welcome and thank everyone listening to our second quarter 2026 conference call. I am excited to announce that on July 1, 2026, Prosperity Bancshares completed the merger of Stellar Bancorp and its wholly owned subsidiary, Stellar Bank. Headquartered in Houston, Texas, Stellar Bank operated 52 banking offices including its main office in Houston and banking offices in the Houston, Beaumont and East Texas areas, and in Dallas, Texas. I am also pleased to announce that Robert R. Franklin, Jr., former CEO of Stellar Bancorp, and Joe B. Swinbank, a former Stellar director, have joined the Prosperity Bancshares board of directors and that Ramon Vitulli, former president of Stellar Bank, and Pat Parsons, a former Stellar Bank director, have joined the Prosperity Bank Board of Directors. Pat was instrumental in building Stellar's Beaumont franchise over the years. With regard to earnings, excluding the gain on the Visa Class B-2 stock exchange, net of investment security sales that we had, and merger-related expenses, net income was $162 million and earnings per diluted common share was $1.62 for the three months ended June 30, 2026, compared with $135 million or $1.42 per diluted common share for the same period in 2025. This represents a 20.4% increase in net income and a 14.1% increase in diluted earnings per share. These earnings for the second quarter of 2026 do not reflect any contribution from Stellar. Excluding one-time merger-related expenses and charges related to security sales, Stellar had $42.1 million in pre-tax, pre-provision core income. Assuming a 21% tax rate, Stellar's second quarter net income would have been approximately $33 million. Annualizing this amount, Stellar's and Prosperity's second quarter core net income after excluding the nonrecurring items shows an annual run rate of approximately $780 million. This does not reflect any cost savings that we expect to achieve after the operational integrations of American Bank in September, Texas Partners Bank in November, and Stellar Bank in March 2027. As mentioned on prior calls, these are the results we expected, and we believe these tailwinds should continue to be positive for the near future. With regard to loans, loans were $25 billion at June 30, 2026, an increase of $2.8 billion or 12.8% compared with $22.2 billion at June 30, 2025, and this was primarily due to the American Bank and Texas Partners Bank mergers. Loans excluding warehouse purchase program loans were $23.7 billion at June 30, 2026 compared with $23.8 billion at March 31, 2026, a decrease of $117 million. We experienced paydowns this quarter with our one- to four-family residential portfolio decreasing over $100 million as well as other large paydowns. We also are focusing on the integration with our new partners. Our deposits were $32.6 billion at June 30, 2026, an increase of $5.1 billion or 18.7% compared with $27.4 billion at June 30, 2025, primarily again due to the American Bank and Texas Partners merger. Our linked-quarter deposits decreased $33 million from $32.6 billion at March 31, 2026. However, our noninterest-bearing deposits increased $159 million during the second quarter of 2026. Our noninterest-bearing deposits of $10.7 billion at June 30, 2026 represent 32.9% of our total deposits. The net interest margin, on a tax-equivalent basis, was 3.47% for the three months ended June 30, 2026, compared with 3.18% for the same period in 2025 and 3.51% for the three months ended March 31, 2026. The net interest margin in the first quarter of 2026 was impacted by a one-time loan interest income of $4 million from a nonaccrual loan. The net interest margin continues to be positively impacted by the repricing of assets as we predicted and mentioned during previous calls. We are really excited about where our net interest margin is headed. Asset quality: our nonperforming assets totaled $130 million or 34 basis points of quarterly average interest-earning assets at June 30, 2026, compared with $122 million or 33 basis points of quarterly average interest-earning assets at March 31, 2026 and $110 million, again at 33 basis points of quarterly average interest-earning assets at June 30, 2025. So you saw somewhat of an increase there, but with the new banks that have come in and the amount of assets, we are still basically at the same ratio. The allowance for credit losses on loans and off-balance-sheet credit exposure was $420 million at June 30, 2026. The allowance for credit losses on loans was 2.9 times the amount of nonperforming assets. With regard to acquisitions, we are excited about the synergy we have with our new partners, Stellar Bank, Texas Partners Bank, and American Bank. Our top priority is the operational integration of all three banks and our combined teams are working very hard to ensure they are successful. While we continue to have conversations with other bankers regarding potential acquisition opportunities, we remain focused on the integration of our three transactions. Texas has one of the strongest and most diverse state economies in the U.S., ranking as the second largest by GDP after California and approximately the eighth largest economy in the world. Oklahoma has a smaller but stable economy, heavily influenced by oil and gas, with more modest growth. Texas continues to shine as more people and companies move to the state because of the business-friendly political structure and no state income tax. Prosperity continues to focus on building core relationships, maintaining sound asset quality, and operating the bank in an efficient manner while investing in ever-changing technology and product distribution channels. We intend to continue to grow the company both organically and through mergers and acquisitions. I want to thank everyone involved in our company for helping to make it the success it has become. Again, thank you for your support of our company. Let me turn over our discussion to Asylbek Osmonov, our chief financial officer, to discuss some of the specific financial results we achieved. Asylbek.
Thank you, Mr. Zalman. Good morning, everyone. Net interest income before provision for credit losses for the three months ended June 30, 2026 was $330.6 million, an increase of $62.8 million compared to $267.8 million for the same period in 2025, and an increase of $9.4 million compared to $321.2 million for the quarter ended March 31, 2026. The net interest margin on a tax-equivalent basis was 3.47% for the three months ended June 30, 2026, an increase of 29 basis points compared to 3.18% for the same period in 2025 and a decrease of 4 basis points compared to 3.51% for the quarter ended March 31, 2026. The linked-quarter margin decrease was primarily due to the previously mentioned one-time loan interest income of $4 million recorded during the first quarter of 2026. Excluding this one-time loan income, the net interest margin increased by 1 basis point on a linked-quarter basis. Excluding purchase accounting adjustments, the net interest margin for the three months ended June 30, 2026 was 3.41% compared to 3.14% for the same period in 2025 and 3.40% for the quarter ended March 31, 2026. The fair value loan income for the second quarter of 2026 was $4 million compared to $3.7 million for the first quarter of 2026. Fair value loan income for the third quarter of 2026 is expected to be in the range of $6 million to $8 million. Noninterest income was $60.7 million for the three months ended June 30, 2026, compared to $46.5 million for the quarter ended March 31, 2026 and $43.0 million for the same period in 2025. The higher noninterest income during the second quarter of 2026 includes a net gain of $8.2 million resulting from the conversion of Visa stock, partially offset by a loss on the sale of investment securities. Noninterest expense was $176.2 million for the three months ended June 30, 2026 compared to $217.3 million for the quarter ended March 31, 2026 and $138.6 million for the same period in 2025. The first quarter included merger-related expenses of $42.5 million. For the third quarter of 2026, we expect noninterest expense to be in the range of $244 million to $250 million. This includes the addition of Stellar Bank operations. However, this projection does not include any one-time merger-related expenses associated with the Stellar merger. The efficiency ratio was 46.0% for the three months ended June 30, 2026 compared to 59.2% for the quarter ended March 31, 2026 and 44.8% for the same period in 2025. The bond portfolio metrics at June 30, 2026 have a modified duration of 3.7 and projected annual cash flows of approximately $2.2 billion. I will now provide a high-level overview of Stellar's financial performance for the second quarter of 2026. Stellar also delivered strong financial results during the quarter. Stellar's net interest income before provision for credit losses for the three months ended June 2026 was $106.4 million, an increase compared to $105.9 million for the quarter ended March 31, 2026. The second quarter results included one-time merger-related expenses and losses related to the sale of certain investment securities. Excluding these one-time charges, Stellar's adjusted pre-tax, pre-provision net income was $42.1 million, an increase of $2.9 million compared to the first quarter of 2026. Now let me turn over the presentation to Tim Timanus for some additional detail on loan and asset quality. Timanus.
Thank you, Asylbek. Our nonperforming assets at quarter-end June 30, 2026 totaled $131 million or 0.52% of loans and other real estate, compared to $122 million or 0.48% at March 31, 2026. Since June 30, 2026, $5 million of nonperforming assets have been removed or put under contract for sale. The June 30, 2026 nonperforming asset total was comprised of $119 million in loans, $9 thousand in repossessed assets, and $11.3 million in other real estate. Net charge-offs for the three months ended June 30, 2026 were $2.18 million compared to net charge-offs of $41.3 million for the quarter ended March 31, 2026. There was no provision to the allowance for credit losses during the quarter ended June 30, 2026. Zero dollars were taken into income from the allowance during the quarter ended June 30, 2026. The average monthly new loan production for the quarter ended June 30, 2026 was $454 million, compared to $312 million for the quarter ended March 31, 2026. Loans outstanding at June 30, 2026 were approximately $25.028 billion compared to $25.288 billion at March 31, 2026. The June 30, 2026 loan total is made up of 34% fixed-rate loans, 33% floating-rate loans and 33% variable-rate loans. I will now turn it over to Charlotte Rasche.
Thank you, Timanus. At this time, we are prepared to answer your questions. Our call operator, David, will assist us with questions.
Questions and answers
We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question comes from Janet Lee with TD Cowen. Please go ahead.
Good morning.
Good morning.
Good morning.
From the last call, you had talked about net interest margin reaching the 3.70 level as you exit 2026 and then getting in the 3.80 range in 2027. Do you still have a good line of sight into reaching that level, or is there any change to the outlook versus before?
Janet, our models are still showing that we will end the year around 3.70 to 3.75. Asylbek, do you want to add to that?
We provided guidance of 3.70 for the year-end. With the addition of Stellar, it is still accretive to us, so the guidance stays the same. For 2027, we said 3.80 and I think that remains reasonable for the full year; possibly 3.80 to 3.85 depending on market conditions. One caution as we start getting past 3.7% net interest margin is that we remain competitive on deposit pricing, which could temper margin a bit as we balance growth and pricing.
We may raise our money market account rates a little, which could temper the net interest margin slightly. Once we hit 3.7%, we may try to grow more organically.
Okay, that makes sense. But the 3.80-plus range still contemplates that you are raising rates on your deposits?
Some rate increases, yes.
We have increased some deposit rates already, yes.
Okay. Got it. I understand that the priority is on the integration part, but on the Stellar side, perhaps, or even on the legacy Prosperity side, what are you seeing in terms of loan growth and demand there? It looks like, outside of the mortgage warehouse, it was fairly stable quarter-over-quarter. Just wanted to see what you are seeing on that front.
Yes.
This is Kevin. For the remainder of the year companywide, we expect loan balances to be relatively flat. Stellar has a robust pipeline of roughly $1.2 billion and they feel they will grow loans about another $200 million in the back half of the year; they grew about $200 million in the first half. Overall for the company, I would call it flattish for the remainder of the year. On the positive side, production has been picking up. We have several hundred million, probably closer to $400 million, of construction deals which we have approved so far this year that are in our pipeline. They will not provide significant funding this year because equity needs to be contributed first. Beginning in the first quarter and more materially in the second quarter of next year, the pull-through of those deals should start generating positive overall company growth.
Everything Kevin said is accurate. We forecast stability going forward. We have a decent pipeline of loans and see decent loan activity in the marketplace. The only real hindrance is very aggressive structuring and pricing from some competitors. We must be cognizant and careful with that. But overall, things look decent right now.
Credit spreads are at 25- or 30-year lows across the risk spectrum. Some pricing is reaching levels that are difficult to justify on a risk-reward basis. We've reviewed meaningful transactions priced at SOFR plus 125 recently. The math on that yields an opening day coupon in the mid-4% range, which is very low. Risk-reward across the spectrum right now is, in our view, slightly mispriced.
I want to add color because I think analysts sometimes focus only on loan growth. You need to consider profitability. Last week we had a loan committee review for a Grade A company. It was a $20 million credit priced at a seven-year fixed rate at 5.5% with 25-year amortization and no meaningful deposits, basically a dry relationship. You have to compare that to buying a mortgage-backed security with a 4.8-year duration yielding around 5.0%. Can we operate on a 50-basis-point spread? The answer is generally no: you cannot cover lender compensation, officer compensation, reserve for loan loss, and make an acceptable return on only 50 basis points. So we're paying attention to profitability and not simply putting loans on the books to grow loan balances. Bigger, dry relationships at those pricing levels generally do not make sense for us unless the overall relationship brings meaningful deposits or other business.
Got it. Appreciate all the color. I will step back.
And the next question comes from Brett Rabatin with Stonex Group. Please go ahead.
Hey. Good morning, everybody. Thanks for taking my questions. I wanted to start on other income. I know there was some noise in 2Q with gains and securities. What drove the increase in other income? Was that related to anything in particular, and does that continue from here?
Yes.
On the other income line, we had about $2.5 million of annual income that is not expected to recur every quarter. Other than that and the gain on Visa stock, most of our noninterest income is core. If you're thinking about a run rate, Prosperity before Stellar would be around $50 million of noninterest income, and Stellar adds roughly $5 million to $6 million. So a reasonable combined run rate might be $54 million to $56 million for noninterest income.
Okay, that is great color. Appreciate that. And David, you were just talking about loans versus securities and where the bond market is. Any increased appetite to grow the securities portfolio from here, and thoughts on the securities portfolio size post-Stellar integration?
Our first focus will always be loans. However, when bond yields are attractive and lending opportunities are not priced to deliver acceptable profitability, we will deploy excess funds into securities. We are focused on building loans first, but whatever we do not put into loans will continue to go into the bond market. When you strip out the banks that have joined us, our legacy deposits have grown organically by about 3.2%. Once things stabilize, we expect organic deposit growth of 2% to 4% annually. So going forward you'll see a combination of loan and securities growth depending on relative value.
Okay. And then on the linked-quarter improvement in loan production, is that just increased market activity or anything particular driving that rise in production?
We see activity as stable or maybe growing a bit. Our teams are constantly working to bring in customers, which includes loan and deposit customers. The aggressive pricing and structures from some competitors have impacted us; such dynamics historically come and go. Many loans we book do not fund immediately—construction loans, for instance, require equity to be contributed first—so there's a normal delay between booking and funding. That timing is typical and ultimately positive.
To add, Texas is still growing—people and businesses continue to relocate to the state. We saw more production, but also significant paydowns: over $100 million in one- to four-family paydowns helped drive the quarterly decrease in that portfolio. Overall, Texas remains a very strong market and Oklahoma is doing well too. We are being cautious and focused on profitability rather than growth at any price.
Okay, great. Appreciate all the color, guys.
And the next question comes from Manan Gosalia with Morgan Stanley. Please go ahead.
Hi. Good morning.
Good morning.
You spoke about credit spreads being at multi-decade lows. Is the aggressive competition on structure and pricing widespread across loan segments like construction, CRE, middle market, and C&I, or is it concentrated in certain segments where the lender might expect more ancillary business?
The SOFR plus 125 deals are outliers—two notable deals recently. More broadly, aggressive pricing is concentrated in larger loans. Many of these aggressive bids are from larger banks or regionals that have recently entered or are trying to enter the Texas market. They are targeting big credits to make a splash. It is not an across-the-board phenomenon; it’s mostly affecting very large transactions.
To reiterate, the most aggressive pricing tends to be on larger loans—multifamily, retail centers, office, and other bigger asset classes—where multiple banks are competing. Those large dry relationships often attract the lowest pricing. It's driven by entrants trying to establish market presence through large transactions.
By way of data, the average monthly loan production for Q2 was $454 million, and the blended average rate on that production was around 6.5%. Stellar's new loan production was also around 6.5%. So on a blended basis, our new originations are at comparable yields.
I appreciate that. As you do more acquisitions and grow the balance sheet, do you need to invest in product capabilities, fees, or distribution to capture more of the client relationship economics—things like treasury, investment banking, or other fee businesses?
Over the last three years we invested heavily in technology and conversions—our core systems modernization was necessary to scale and complete these deals. That investment positions us well to capture a larger share of client relationships. Texas Partners brought experienced treasury management talent, and we see that business growing. We are investing in products and distribution and feel well positioned to capture more client economics as we integrate these acquisitions.
Got it. Thank you.
And the next question comes from Peter Winter with D.A. Davidson. Please go ahead.
Good afternoon. I was wondering, Kevin, if you can give an update on the mortgage warehouse business and also, with the increase in mortgage rates, does that virtually shut down refi activity?
Refi activity is muted but not shut down. I looked at the first 28 days of the quarter and we are averaging roughly $1.25 billion in warehouse outstandings, which is slightly off from Q2 average. Typically Q3 is pretty good in July and August, with September a bit off. I would not be surprised if we average about $1.2 billion to $1.225 billion in Q3, which would be about $100 million off Q2 average.
Got it. Thanks. David, how are you thinking about deposit growth in the second half of the year? You mentioned possibly being more competitive on money market rates; how should we think about deposit rates going forward assuming the Fed is on hold?
It's hard to predict a large surge in deposit growth right away because integrations cause some relationships to come and go. However, our legacy deposits tend to grow 2% to 4% organically. Our modeling team has included a small chance of a quarter-point rate increase by year-end, though I personally do not think the Fed will raise in my view. Our modeling shows strong net interest margin at the current rates, and even higher if rates go up. Historically, over the long run, we've shown consistent increases in earnings, EPS, assets, and deposits except for a few years impacted by rapid rate moves. Our customers have been loyal, and once we reach 3.7% NIM, we may increase deposit rates modestly to reward customers while maintaining profitability.
On deposits, while total balances can show seasonal decreases due to public funds seasonality in Q2 and Q3, if you strip out public funds, our core deposits actually increased in the second quarter. This was a pretty strong showing for what is usually a tougher deposit quarter.
That's great. Thanks, David.
And the next question comes from Michael Rose with Raymond James. Please go ahead.
Hey, good afternoon, everyone. Thanks for taking my questions. Wanted to start on the Stellar side. It looks like the margin was up meaningfully in the quarter, and it looks like there might have been some restructuring and securities balances were down. Can you help me understand how much of that benefit is driving the NIM guidance that Asylbek laid out?
Yes, Michael. We picked up about 9 basis points on the NIM. There was about a $30 million paydown of subordinated debt in the quarter, but the primary driver was loan activity: we booked roughly $525 million in new loans and renewed another $600 million to $700 million—so about $1.1 billion to $1.2 billion in the quarter—at an average loan rate of approximately 6.5%. Deposit costs held relatively steady, and that loan activity was the primary driver of the NIM expansion.
To add, the sale of securities happened at the end of the quarter and thus had no impact on the NIM for the quarter. The 9 basis point increase was a core improvement in margin.
Okay, very helpful. And then one follow-up related to integration efforts and cost savings realizations for American Bank and Texas Partners Bank. Where do you stand and what are the timing and magnitude of the expected savings?
On American Bank and Texas Partners Bank, we have realized some savings already, but most of the cost savings will occur after the system conversions scheduled for September for American and November for Texas Partners. We expect additional pre-tax cost savings of $20 million to $25 million combined from those two transactions, with the full impact realized in 2027. Regarding Stellar, our projected cost savings remain in line with what we announced pre-merger. Timing may shift because Stellar's conversion is scheduled for March of next year due to the sequencing of three acquisitions, but the expected savings remain intact.
Okay, very helpful. Thanks, Asylbek. I will step back.
And the next question comes from David Chiaverini with Jefferies. Please go ahead.
So you mentioned a focus on profitability. Can you remind us how you are thinking about ROTCE targets once the conversions are done and cost savings are fully baked in looking out to 2027?
Right now we are running over 15% return on tangible common equity. If we hit the numbers we've outlined and realize the projected cost savings and earnings accretion, I believe we should be targeting roughly 17% to 18% ROTCE.
Initially, we may take a hit around the conversion timing but we expect to build it up quickly. If you add projected cost savings to the current run rate—take the $780 million run rate and add the incremental savings and earnings—we expect to reach roughly the 17% to 18% range on return on tangible common equity.
Perfect. And on capital and buybacks: you reduced buybacks in the second quarter. How should we think about buybacks going forward?
Our buybacks are opportunistic. If the stock is trading at an attractive valuation and there are no adverse developments, we will buy shares. We have strong cash generation, a projected run rate in that $780 million area plus incremental savings, and dividend payouts of roughly $200 million. We have plenty of flexibility. Q2 buybacks were muted largely due to blackout periods around our transactions, but we intend to be active when appropriate.
To add, buybacks were muted in Q2 largely because of blackout restrictions tied to our pending transactions; otherwise we would have executed more.
Got it. Very helpful. Thank you.
And the next question comes from Stephen Scouten with Piper Sandler. Please go ahead.
Morning. Going back to Stellar legacy results: with $33 million in net income you mentioned, that seems ahead of previous consensus. Are results tracking ahead of what you assumed when you announced the deal? Any material changes to marks at closing versus expectations?
Stellar is running ahead of what we projected. We had modeled roughly $126 million in net income for Stellar in 2027; based on the $33 million in the quarter, we're on pace to be slightly ahead, closer to $130 million. Regarding purchase accounting marks, we're still finalizing those and don't have the final numbers yet, but preliminary marks appear a bit more favorable than our initial projections. We'll provide finalized marks in the third quarter disclosures.
Okay. And you mentioned $6 million to $8 million in fair value or accretion for Q3. Is that scheduled versus accelerated? Any caveats?
We estimate $6 million to $8 million for the third quarter, but that can be impacted by loan prepayments or payoffs that affect the model. The $6 million to $8 million range is our current expectation based on the portfolio at quarter end.
Understood. And on pro forma loan loss reserves with Stellar close: any preliminary indication where that will land? Also, you've had zero provision in several quarters—do you expect provisions to increase with loan growth or do you have excess reserve capacity?
We are still finalizing the pro forma allowance levels and don't have a definitive number to share today. Including Stellar could increase the allowance, and we'll provide pro forma reserve details next quarter when we finalize purchase accounting. Regarding provisions, we will follow our model. If the model indicates a need to provision, we will; if not, we will not. Currently we have roughly three times the amount in allowance compared to nonperforming assets, so absent an unexpected deterioration in the portfolio, we do not anticipate a near-term need for provisions based on current metrics.
Very helpful. Thank you.
And the next question comes from Jon Arfstrom with RBC Capital Markets. Please go ahead.
Hey. Thanks. Good morning. Asylbek, can you walk through the expense cadence again and what you expect the run rate to look like when everything is fully converted?
For Q3, we project noninterest expense of $244 million to $250 million, which includes Stellar operations and some savings realized from American Bank. However, that range does not assume the full cost savings from American and Texas Partners, which we expect to generate an additional $20 million to $25 million of pre-tax savings combined once conversions are complete. On Stellar, our announced pre-tax cost savings are expected to be about $80 million to $85 million. In total, combining Stellar and the other two deals, we expect roughly $100 million to $110 million of additional pre-tax cost savings when fully realized, though timing may be pushed based on conversion sequencing. Those are pre-tax figures.
We feel comfortable with those savings estimates; we've vetted them multiple times. We tend to err on the conservative side when communicating expectations.
Okay. At your asset size now, is there anything else you need to do—invest in capabilities or infrastructure—that could cause additional expense pressure compared to a year ago?
We actually needed scale to utilize the investments we've already made. Regulators and operational considerations led us to build infrastructure for a larger organization. These acquisitions help utilize those investments rather than requiring a significant new incremental spend beyond the planned integration and system conversions.
Okay. Thank you very much.
This concludes our question and answer session. I would like to turn the conference back over to Charlotte Rasche for any closing remarks.
Thank you. Thank you, ladies and gentlemen, for taking the time to participate in our call today. We appreciate your support of our company and we will continue to work on building shareholder value.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.